Fuller Planes and Healthier Profits

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Airline deregulation works. That must be the conclusion of millions of travelers who have traded a little elbow room for bargain rates, and of airlines that have turned full planes into healthy profits. Plane fares will increase this year because of skyrocketing jet fuel costs, but the cost of flying in 1979 will still be less than than it would have been under the old system.

The battle for competition in air travel is not over, however. Domestic lines are gradually gaining the freedom to choose where they fly and how much they charge. But on international routes, deregulation requires the cooperation of other governments; and like some light wines and most small children, the idea of competition does not travel well. That is why the Civil Aeronautics Board has now served notice that America's international carriers will be expected to lead the fight for competition or risk the loss of routes.

Many of the bilateral treaties that set the rules for commercial aviation limit the number of airlines flying each route and permit both governments to limit the frequency of flights and to veto fare proposals. Conceivably, such treaties could be renounced in the interests of the American preference for competition; the importance of the American market to foreign carriers gives the United States enormous bargaining power. But the political price of such quarrels with friends would be substantial; the Civil Aeronautics Board prefers subtler means of persuasion.

Its strategy will be to divide and conquer the price riggers. Britain, the first European stop for 41 percent of all trans‐Atlantic passengers, opposes new entrants to trans‐Atlantic mutes. But Belgium, just across the English Channel, does not. By negotiating wide‐open travel with Belgium — and liberalized deals with Germany and the Netherlands as well — the board expects to make Brussels, Amsterdam or Frankfurt the preferred gateways to northern Europe. The prospective loss of tourist dollars could give Britain an appreciation of the virtues of competition.

This approach may not always work, however, particularly in southern Europe, Asia and Latin America, where the opposition to open skies has been harder to breach. The board prefers not to challenge the policies of the Japanese or Australian Governments directly. But where one of our carriers is failing to reduce fares or improve service, a more aggressive competitor may be invited to replace it.

In the short run, this threat should have the practical effect of opening up more seats to discount travel and easing the restrictions on discount fares. In the long run, more aggressive competition from American carriers may compel other countries to reconsider their opposition to free markets. Discounts and good service attract passengers, and few foreign airlines are likely to stand by idly as American carriers siphon off their customers. Once foreign airlines lose the seeming advantages of government controls, much of the political support for regulation should melt away. That will be good for passengers and, to judge by our domestic experience, good for the airlines as well.